U.S.

Department of Labor Administrative Review Board

200 Constitution Avenue, NW
Washington, DC 20210

In the Matter of:

OFFICE OF FEDERAL CONTRACT ARB CASE NO. 00-079

COMPLIANCE PROGRAMS, UNITED
STATES DEPARTMENT OF LABOR, ALJ CASE NO. 97-OFC-16

PLAINTIFF, DATE: March 31, 2003

v.

BANK OF AMERICA,

DEFENDANT.

BEFORE: THE ADMINISTRATIVE REVIEW BOARD

Appearances:

For the Plaintiff:

Gary M. Buff, Associate Solicitor; Beverly Dankowitz, Esq., U.S. Department
of Labor, Washington, D.C.

For the Defendant:

Richard F. Kane, Esq., Bruce M. Steen, Esq., McGuire, Woods, Battle and
Booth, LLP, Charlotte, North Carolina

DECISION AND ORDER OF REMAND

The Regional Director of the Office of Federal Contract Compliance Programs

(OFCCP) in Atlanta notified the President and Chief Executive Officer of NationsBank1
in Charlotte, North Carolina on November 24, 1993, that NationsBank’s Charlotte facility
had been selected for a compliance review under all three contract compliance laws,
Executive Order No. 11,246, 3 C.F.R. § 339 (1964-1965), reprinted as amended in 42
U.S.C. § 2000e note (2000), Section 503 of the Rehabilitation Act of 1973, as amended,

1
NationsBank and Bank of America (BOA) merged after the filing of the complaint in this
case. Therefore, this decision refers to the bank as either NationsBank or BOA.

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 29 U.S.C. § 793 (2002) and Section 402 of the Vietnam Era Veterans Readjustment
Assistance Act of 1974, as amended, 38 U.S.C. §§ 4211-4212 (2000). Such reviews are
conducted periodically to determine whether covered government contractors are in
compliance with the affirmative action and nondiscrimination requirements of those laws
and their implementing regulations. See 41 C.F.R. § 60 (2002). The Regional Director
requested that NationsBank submit its affirmative action program and other
documentation for review. Exhibit C, Letter of Nov. 24, 1993 from OFCCP Regional
Director Carol A. Gaudin to NationsBank President and Chief Executive Officer Hugh L.
McColl. NationsBank provided the requested information and OFCCP conducted an on-
site review in April 1994. Administrative Law Judge (ALJ) Recommended Order
Granting Defendant’s Motion for Summary Decision (Recommended Order) at 7.
OFCCP notified NationsBank in October 1994 of its finding that the bank had violated
Executive Order No. 11,246 by discriminating against minority applicants for hiring in
entry level positions.

Soon after informing NationsBank of the alleged violations found in the Charlotte
office, OFCCP decided to initiate additional compliance reviews at NationsBank offices
in Tampa, Florida and Columbia, South Carolina. NationsBank refused to acquiesce to
those reviews. In March 1995, it filed an action in the United States District Court for the
Western District of North Carolina, alleging that the selection of its facilities in Tampa
and Columbia violated the Fourth Amendment.

In February 1997, NationsBank amended the complaint it had filed in federal

district court (contesting OFCCP’s selection for review of its Tampa, Florida and
Columbia, South Carolina facilities) to allege that OFCCP’s selection of the Charlotte
facility for review violated the Fourth Amendment. The district court granted
NationsBank’s request for a preliminary injunction restraining OFCCP from prosecuting
an enforcement action against NationsBank for the alleged violations found in the
compliance review of the Charlotte facility. But on April 6, 1999, the United States
Court of Appeals for the Fourth Circuit granted summary judgment to the Department of
Labor and vacated the District Court’s entry of the preliminary injunction on the grounds
that NationsBank first had to exhaust its administrative remedies.

On July 18, 1997, OFCCP filed the complaint in this proceeding, requesting that
NationsBank comply with the Executive Order or be debarred (except for contracts for
government deposits or share insurance). Bank of America (BOA) moved for summary
decision on the grounds that OFCCP violated the Fourth Amendment when it selected the
Charlotte facility for review. A U.S. Department of Labor ALJ granted that motion. He
concluded that the selection of the Charlotte facility for review was not based on an
administrative plan containing neutral criteria and was arbitrary and unconstitutional.
Recommended Order at 15. The record for the summary judgment decision consisted of

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 selected excerpts from depositions and documents produced in the course of discovery in
the federal district court proceeding, the motion for summary judgment, and the parties’
briefs and findings of fact. The ALJ held no hearing but issued a Recommended Order
based on this record alone.

OFCCP filed exceptions to the ALJ’s Recommended Order with this Board. We
remand because we determine that genuine issues of material fact exist and therefore
summary judgment was improperly granted.

BACKGROUND

In January 1992, OFCCP issued the Equal Employment Data System (EEDS)
User’s Manual, for use by its regional and district offices in “selecting supply and service
contractors for compliance reviews.” The EEDS included “specific procedures and
criteria for making decisions and a series of reports that provide the data on which
selection decisions are to be based.” Exhibit D, section titled “Equal Employment Data
System.” The EEDS provided that “[a]pproximately 1 percent of the selections are made
from [a] random sample, 84 percent from the list of flagged establishments, and 15
percent discretionary.” Id. at 2. The EEDS directed that “[w]hen the district office
receives its fiscal year program, it should decide how many supply and service reviews
must be scheduled and follow [the listed] steps.” Id. at 2-3. Among those steps was the
following:

Fifteen Percent Discretionary Selections, District Office Directors may

select up to 15 percent of their supply and service compliance reviews from
among contractors other than those flagged on the rank listing [and] [w]hen
deciding, the Director should consider [five factors, including] [e]xpansion
of employment in an industry or at specific locations.

Id. at 5.

In September 1993, the Acting Director of OFCCP transmitted the FY 1994

Operational Plan to all OFCCP Regional Directors. He noted in his transmittal
memorandum that “the most significant change this year is that, Corporate Management
Reviews are now a planned action.” Sept. 13, 1993 memorandum from Leonard J.
Biermann, Acting Director of OFCCP to Regional Directors, Exhibit I, Defendant’s
[OFCCP] Response to NationsBank’s First Request for Production of Documents,
documents produced in response to Request for Production No. 11.2 The Plan itself

2
OFCCP had decided as early as 1991 to conduct corporate management reviews. See
Deposition of Harold M. Busch, April 15, 1997, Exhibit K at 54.

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 established four priorities in the enforcement area for FY 1994, the first of which was
Corporate Management Reviews. The Plan stated that one of OFCCP’s priorities was
“[e]liminating the attitudinal and institutional barriers to the advancement of minorities
and women in corporate management positions and executive careers (Corporate
Management Reviews).” The Plan elaborated that, in the area of “Compliance Actions,”
specifically “Compliance Reviews,” one of the “Special Initiatives” was “Corporate
Management Reviews.”

To implement the Corporate Management Review (CMR) initiative, OFCCP’s

Assistant District Director in Charlotte, North Carolina, Paul Deavers, selected “about 3-
5” corporations from a list of companies with corporate headquarters in the Charlotte
OFCCP district and provided these to his District Director, Jerome Geathers. 3 Exhibit F,
Deposition of Paul S. Deavers of Oct. 29, 1996, at 32. Deavers’ selections were based on
criteria he had received from Geathers, namely that the selected employers have their
corporate headquarters in the Charlotte district, that they have at least 5,000 employees,
but they have not been the subject of a compliance review in the past 36 months. Id. at
30-34.

Geathers testified that the criteria he had been given for selecting potential
subjects of a corporate management review were “that the corporate headquarters must be
in my district, it must have 5,000 employees, and it must be a multi-establishment
facility.”4 Deposition of Jerome Geathers of Sept. 5, 1996, Exhibit H at 102-103.
Because of budgetary problems, Geathers narrowed the potential subjects further – to
companies in the city of Charlotte and in the Mecklenberg County area. This meant that
Geathers, Deavers, and the compliance officer would not have to travel and stay
overnight. Id. at 103-105. In addition, Geathers wanted to be personally involved in the
review, the first CMR to be conducted in his district. Geathers testified that he been
instructed to select two companies for review and present one of them at a meeting at
regional headquarters in Atlanta, keeping the other as a backup. He selected Duke Power
Company and NationsBank, in that order, id., and attended the meeting in Atlanta with
the Regional Director in the fall of 1993. Id. at 101.

3
Deavers did not recall the source of the list (a computer printout of contractors with corporate
headquarters in his district) but assumed it was an internal OFCCP document. Exhibit F at 31-32.
4
Harold Busch, whose position is not identified in this record (but who is identified in Beverly
Enterprises, Inc. v. Herman, 130 F. Supp. 2d 1, 10 (D.D.C. 2000), as the OFCCP National Office
Director of program management), testified in his deposition that companies selected for corporate
management reviews had to have at least 4,000 employees and be on the Fortune 1000 list. Exhibit
K at 53.

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 The Regional Director, Carol Ann Gaudin, testified that, at that meeting in
Atlanta, she decided not to select Duke Power because another district in the Atlanta
region had already selected a utility for review. She selected NationsBank because “it
was one of the top five largest corporations in our region and it had not been reviewed as
NationsBank as such, the corporate headquarters. We knew we had jurisdiction, and we
thought that there would be a lot of opportunities for affirmative action there because it
was a growing corporation.” Deposition of Carol Gaudin of Dec. 17, 1996, Exhibit M at
74-75. On November 24, 1993, Gaudin sent the letter to NationsBank scheduling the
compliance review.

THE ALJ’S DECISION

The ALJ stated that the search of NationsBank’s Charlotte headquarters was made
pursuant to Executive Order No. 11,246, as amended. He recognized that the contract
between NationsBank and the government included a clause providing consent to
searches conducted to determine compliance with the Executive Order, citing 41 C.F.R. §
60-1.4(a)(5):

The contractor will furnish all information and reports required by

Executive Order 11246 . . . and will permit access to his books, records,
and accounts by the contracting agency and the Secretary of Labor for
purposes of investigation to ascertain compliance with such rules,
regulations, and orders.

He also noted that the Secretary had held, in a case arising under Section 503 of
the Rehabilitation Act of 1973, “that the Plaintiff (OFCCP) has the authority under
Executive Order 11246” to conduct a search of a defendant’s records because the
defendant “had consented to be searched by the government for the administration and
enforcement of Section 503.” Id. at 10, citing OFCCP v. City Pub. Serv. of San Antonio,
1989 OFC-5 (Sec’y Jan. 18, 1995). The ALJ suggested that, because the search in that
case had been initiated in response to a complaint, the Secretary’s decision did not stand
for the proposition that consent alone was sufficient.

In addition, he stated, “Courts have held that any consent given was consent only
to searches that comport with the Fourth Amendment’s constitutional standards of
reasonableness.” Recommended Order at 11. According to the ALJ, “[t]herefore, the
reasonableness of the search in this case must be established upon a showing that the
search is pursuant to an administrative plan containing neutral criteria.” Recommended
Order at 10, citing United States v. New Orleans Pub. Serv., Inc., 723 F.2d 422, 426 (5th
Cir. 1984) (also known as NOPSI III). The ALJ then set about determining whether this
requirement had been met.

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 The ALJ found that at the time the Charlotte facility was chosen, OFCCP’s
administrative plan for the selection of contractors for compliance reviews was the
EEDS. He based this finding, in part, on an April 1995 Policy Alert issued by the then
Deputy Assistant Secretary reminding “that the criteria and procedures described in the
January 1992 . . . (EEDS) Manual are to be used to select contractors for service and
supply compliance reviews.” ALJ Recommended Order at 12. Because OFCCP did not
specifically dispute the Policy Alert’s applicability, he considered this finding undisputed
for purposes of summary decision. Id.

Further, the ALJ found that there was no genuine issue of material fact with
respect to whether OFCCP followed its administrative plan containing specific neutral
criteria (EEDS Manual). He stated:

Plaintiff’s description of the procedures used to select Defendant for review

clearly do not follow that described in the EEDS Manual. Defendant’s
assertions of fact numbered 5 through 9 make a powerful case to establish
that the Plaintiff did not follow the procedures of the EEDS Manual when it
selected Defendant for review. These facts are fully supported by the
record submitted in support of the motion for summary decision and are not
addressed in Plaintiff’s response.

Recommended Order at 12.

BOA’s asserted facts were that the EEDS Manual provided for only three types of
compliance reviews, “random selections,” “selections based on analysis or flagged
reviews,” and “discretionary reviews,” but that OFCCP Charlotte District Director
admitted, or OFCCP’s own documents showed, that BOA did not fall under any of these
categories.

Moreover, he found that the selection process actually used by OFCCP “was not
neutral, but was arbitrary to the point of being unconstitutionally unreasonable.” Id. at
12-13. As support for those findings, the ALJ cited BOA’s statements of fact numbered
11 through 21 and its attached exhibits. In particular, he noted the affidavit of Charles J.
Cooly (Defendant’s Personnel Officer) describing a December 12, 1994 telephone
conversation in which Gaudin allegedly said that banks are “notorious” for having the
“worst record of affirmative action.” Id. Based on the affidavit, and his determination
that no evidence in the record “exists to rebut the assertion that the ‘notoriety’ of banks . .
. was not [sic] a factor in the selection process,” he specifically found that selecting
NationsBank’s Charlotte office for review “was in part due to Plaintiff’s perception that
‘banks have notoriously poor affirmative action records.’” Id. at 13-15. He also found

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 that the selection was “because the Defendant happened to be located in Charlotte, North
Carolina.” Id. at 15.

Accepting BOA’s assertion that “there were approximately thirty contractors

which satisfy the threshold criteria for ‘corporate management review’ within the
Charlotte District,” and that “twenty of those are located either within Charlotte’s city
limits or within a short driving distance,” the ALJ stated that OFCCP had not explained
or documented “how the list was narrowed to the two candidates selected by Mr.
Geathers.” Id. at 14. He found that “[n]o documentation exists for the process used in
the selection of Defendant for compliance review, which was in large part as a result of
unreviewable discretion.” Id. According to the ALJ, “such a selection process cannot be
found to be part of an ‘administrative plan containing specific neutral criteria.’” Id.

After making these findings of fact, the ALJ determined that “no genuine issue of
material fact exists with respect to whether the selection of Defendant for compliance
review was reasonable” and that the Defendant’s motion for summary judgment must be
granted. He recommended that OFCCP’s complaint be dismissed. Id. at 15.

POSITIONS OF THE PARTIES ON APPEAL

1. OFCCP’s Position

OFCCP argues that BOA consented to this specific search and thereby made it
valid. Therefore, it contends, the Fourth Amendment requirements applied by the ALJ
are not relevant. 5 Plaintiff’s Exceptions to the Recommended Order (Plaintiff’s
Exceptions) at 7; see also, id. at 8 (“even if OFCCP’s selection of the Charlotte facility
for review would not otherwise have comported with Fourth Amendment standards, Bank
of America’s consent has rendered it lawful.”).

OFCCP also dismisses as inapposite cases holding that a prior contractual consent
to a search constitutes consent only to a reasonable search. OFCCP asserts “Bank of
America consented to this particular compliance review by voluntarily permitting
OFCCP access to its Charlotte facility.” Id. at 10.6 OFCCP argues that “Bank of
America can consent to searches which may not meet the Fourth Amendment ‘probable
cause’ standard applicable to administrative searches” and that the ALJ’s holding that the
Bank may only consent to such reasonable searches should be overruled. Id. at 11.
OFCCP argues further that the Bank’s consent to a search here was freely and voluntarily

5
Before the Board, OFCCP did not argue, as it did before the ALJ, that the search was
justified because it was conducted pursuant to the plan containing neutral criteria.
6
OFCCP argues only that BOA gave contemporaneous consent to the search.

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 given, meeting all the standards for voluntariness established by the Supreme Court and
other courts.

2. Bank of America’s Position

BOA asserts it did not give its free and voluntary consent to the search of its
Charlotte facility, because its consent “was the product of acquiescence to a claim of
lawful authority and/or the result of implied coercion.” Bank of America’s Opposition to
Plaintiff’s Exceptions to the Recommended Order (BOA Opposition) at 4. BOA
contends that the compliance review scheduling letter, Exhibit C, notified it that the
Charlotte facility had been selected for review pursuant to law and that this implied
OFCCP had the authority to search and seize BOA’s documents and property. In other
words, this letter asserted the power to conduct a review “under color of badge,” id. at 5,
and BOA’s acquiescence to it could not have been voluntary.

Further, BOA argues, the scheduling letter warned that refusal to comply with
OFCCP’s directions could result in initiation of enforcement proceedings leading to the
imposition of significant sanctions, including contract cancellation and debarment. These
threats, it contends, left BOA with no choice but to submit to the review. Id. at 6. BOA
analogizes these circumstances to cases in which “a government official demands entry
under color of authority [in which] the occupant has no right to resist the search.” It
argues courts have held such consent was not voluntarily given. Id. at 7.

BOA claims it did not object in 1993 to the scheduling of the review of the
Charlotte facility because it did not know, until March 1995, about the suspicious pattern
of OFCCP’s selection of BOA facilities for review and the Regional Director’s
“outrageous and unsubstantiated bias” against banks. Id. at 7-8.7 BOA also asserts that
prior experience with OFCCP’s compliance reviews did not suggest that OFCCP violated
the Fourth Amendment in selecting BOA for review. The totality of all these
circumstances, BOA submits, demonstrates that it did not voluntarily consent to the
compliance review at the Charlotte facility.

Alternatively, BOA argues that any consent it gave was, as the ALJ held, only
consent to a reasonable investigation within the Fourth Amendment – that is, one in
which BOA had been chosen according to constitutional standards. BOA also urges the
Board to reject OFCCP’s position that BOA could have refused to consent to the review
and litigated its Fourth Amendment claim in the resulting enforcement action. This, it
contends, would have put BOA in an “impossible” position: either risk the imposition of

7
Although Gaudin allegedly made her statement about banks in 1994, Cooley did not execute
his affidavit, and BOA did not amend its complaint to challenge the review of the Charlotte office,
unti1 1997.

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 serious sanctions in order to test the constitutionality of the search, or permit the search
when BOA had no evidence of a violation of the Fourth Amendment and by doing so
relinquish its rights. Id. at 1-13.

ISSUES

We consider the following issues:

(1) Whether genuine issues of material fact exist and

(2) Whether BOA was entitled to judgment as a matter of law on the

grounds that the compliance review violated the Fourth Amendment
because

A) BOA did not voluntarily consent to the compliance review

of its Charlotte facility or

B) The Charlotte facility was not selected for review pursuant

to an administrative plan containing neutral criteria.

JURISDICTION AND SCOPE OF REVIEW

The ARB has jurisdiction in this matter pursuant to Sections 208 and 209 of
Executive Order No. 11,246, and the regulations implementing the contract compliance
laws, 41 C.F.R. §§ 60-1.26, 60-250.64, and 60-741.65, and 41 C.F.R. § 60-30 (2002).
The ALJ’s decision is a recommendation, and the Board has plenary power to determine
whether summary judgment should be granted. 41 C.F.R. §§ 60-30.29 and 60-30.30;
Secretary’s Order No. 1-2002, 67 Fed. Reg. 64272 (October 17, 2002).

STANDARDS FOR SUMMARY DECISION

This matter is before the Board on OFCCP’s exceptions to the ALJ’s

Recommended Order Granting Defendant’s Motion for Summary Decision.8 The
standards for granting summary judgment under the OFCCP Rules of Practice are that
“the judgment sought shall be rendered forthwith if the complaint and answer,
depositions, and admissions on file, together with the affidavits, if any, show that there is
no genuine issue as to any material fact and that the moving party is entitled to a

8
The ALJ used the terms “summary decision” and “summary judgment” interchangeably; the
ALJ Rules of Practice, 29 C.F.R. § 18, use the term “summary decision,” but the applicable standard
is the same as in the OFCCP Rules of Practice, compare 41 C.F.R. § 60-30.23(e) with 29 C.F.R. §
18.40(d), and we will use the terms in the OFCCP Rules.

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 judgment as a matter of law.” 41 C.F.R. § 60-30.23. In addition, the record must be
viewed in the light most favorable to the non-moving party. See OFCCP v. CSX Trans.,
Inc., No. 88-OFC-24, slip op. at 12 (Ass’t. Sec’y Oct. 13, 1994) (“In ruling on a motion
for summary judgment it is not the function of the court to resolve existing factual issues
through a trial by affidavits. . . . The court is to determine whether a genuine issue of
material fact exists, viewing all evidence and factual inferences in the light most
favorable to the party opposing the motion. Ramirez v. National Distillers & Chemical
Corp., 586 F.2d 1315, 1318 (9th Cir. 1978) (citations omitted). See U.S. v. Diebold, Inc.,
369 U.S. 654 (1962).”(internal quotation marks omitted)). For the reasons discussed
below, we conclude that this record presents genuine issues of material fact, and
accordingly we remand this matter to the ALJ for further proceedings consistent with this
order.

DISCUSSION OF APPLICABLE LAW

1. The Fourth Amendment

We start with the constitutional context in which searches must be examined. The
Fourth Amendment provides:

The right of the people to be secure in their persons, houses, papers, and
effects, against unreasonable searches and seizures, shall not be violated,
and no warrants shall issue, but upon probable cause, supported by oath or
affirmation, and particularly describing the place to be searched, and the
persons or things to be seized.

The Fourth Amendment requires balancing competing interests.

It is well established that the Fourth Amendment protects a citizen’s

legitimate expectation of privacy in the “invaded place.” Minnesota v.
Olson, 495 U.S. 91, 95 (1990). It is also well-established that “[a]s the text
of the Fourth Amendment indicates, the ultimate measure of the
constitutionality of a governmental search is ‘reasonableness,’ ... [and]
[w]hether a particular search meets the reasonableness standard is judged
by balancing its intrusion on the individual’s Fourth Amendment interests
against its promotion of legitimate governmental interest.” Vernonia School
District 47J v. Acton, 515 U.S. 646, 652-53 (1995).

S.L. v. Whitburn, 67 F.3d 1299, 1307 (7th Cir. 1995).

The history, context and case law under the Fourth Amendment make it clear that

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 its protection applies to businesses as well as private individuals and their residences,
although the strictures on government intrusion into businesses vary significantly from
intrusion upon a person or his home. “The businessman, like the occupant of a residence,
has a constitutional right to go about his business free from unreasonable official entries
upon his private commercial property.” See v. City of Seattle, 387 U.S. 541, 543 (1967).

Indeed, the Fourth Amendment’s protection of business owners is firmly rooted in

the American experience:

The Warrant Clause of the Fourth Amendment protects commercial

buildings as well as private homes. To hold otherwise would belie the
origin of that Amendment, and the American colonial experience. An
important forerunner of the first 10 Amendments to the United States
Constitution, the Virginia Bill of Rights, specifically opposed “general
warrants, whereby an officer or messenger may be commanded to search
suspected places without evidence of a fact committed.” The general
warrant was a recurring point of contention in the Colonies immediately
preceding the Revolution. The particular offensiveness it engendered was
acutely felt by the merchants and businessmen whose premises and
products were inspected for compliance with the several parliamentary
revenue measures that most irritated the colonists. “[T]he Fourth
Amendment’s commands grew in large measure out of the colonists’
experience with the writs of assistance . . . [that] granted sweeping power to
customs officials and other agents of the King to search at large for
smuggled goods.” United States v. Chadwick, 433 U.S. 1, 7-8, 97 S.Ct.
2476, 2481, 53 L.Ed.2d 538 (1977). See also G. M. Leasing Corp. v.
United States, 429 U.S. 338, 355, 97 S.Ct. 619, 630, 50 L.Ed.2d 530
(1977). Against this background, it is untenable that the ban on warrantless
searches was not intended to shield places of business as well as of
residence.

Marshall v. Barlow’s Inc., 436 U.S. 307, 311-12 (1978).

2. Application of the Fourth Amendment to Administrative Searches

The Fourth Amendment’s requirements clearly apply to a search of a business by

an administrative agency. Barlow’s is one of the leading Supreme Court decisions on the
constitutional strictures applicable to administrative searches. There, a provision of the
Occupational Safety and Health Act gave OSHA the authority to inspect establishments
without a warrant, but the Court held that “the Act is unconstitutional insofar as it

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 purports to authorize inspections without warrant or its equivalent.” Id. at 320.

The Court held that inspections of business premises under OSHA may be
conducted only where there is probable cause. However, it stated that probable cause for
administrative search could be based on “a showing that ‘reasonable legislative or
administrative standards for conducting an . . . inspection are satisfied with respect to a
particular [establishment].’” Id. The Court explained that:

A warrant showing that a specific business has been chosen for an OSHA
search on the basis of a general administrative plan for the enforcement of
the Act derived from neutral sources such as, for example, dispersion of
employees in various types of industries across a given area, and the
desired frequency of searches in any of the lesser divisions of the area,
would protect an employer’s Fourth Amendment rights.

Id. at 321. (Citations and footnotes omitted).

Later in Barlow’s, the Court rephrased the purpose of requiring a warrant for
OSHA administrative searches: “[a] warrant . . . would provide assurances from a neutral
officer that the inspection is reasonable under the Constitution, is authorized by statute,
and is pursuant to an administrative plan containing specific neutral criteria.” Id. at 323.
The Court rejected the government’s assertion that the warrantless search provisions in
other regulatory statutes would be unconstitutional if warrants were required for OSHA
searches, saying “[t]he reasonableness of a warrantless search . . . will depend upon the
specific enforcement needs and privacy guarantees of each statute.” Id.

3. Administrative Searches Pursuant to Executive Order 11,246

The Supreme Court’s interpretation of Fourth Amendment requirements for

administrative searches has been specifically applied to investigations under Executive
Order No. 11,246. In United States v. Mississippi Power & Light Co., 638 F.2d 899 (5th
Cir. Unit A 1981) (MP&L) (also called NOPSI II),9 the Fifth Circuit interpreted Barlow’s

9
This case consolidated consideration of two cases involving proposed searches of companies
doing business with the federal government, New Orleans Public Service, Inc. (NOPSI) and
Mississippi Power and Light (MP&L). Unlike the instant case, the companies in MP&L did not
contractually agree to be subject to investigations of their compliance with the Executive Order. The
Fifth Circuit initially considered whether there could be implied consent to waive Fourth Amendment
rights, based on the companies’ conduct in furnishing services to the government. However, it
concluded it did not need to reach that question because it found that the regulatory scheme for the
Executive Order inspection process met Fourth Amendment requirements.

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 as not requiring a warrant for administrative searches in all circumstances, holding that “a
formal judicial warrant is not required in all administrative searches if the enforcement
procedures contained in the relevant statutes and regulations provide, in both design and
practice, safeguards roughly equivalent to those contained in traditional warrants.” 638
F.2d at 907. The court determined that the Executive Order No. 11,246 process satisfied
the requirements of the Fourth Amendment because the regulatory scheme provided for
resort to the courts before an inspection is conducted. The court held that after that initial
determination, “the specific search that is sought [must be measured] against the broad
Fourth Amendment test of ‘reasonableness.’” Id. The court then specified the elements
of a reasonable search:

One element of the question is whether the proposed search is authorized

by statute, and a second is whether it is properly limited in scope. . . . A
third element should be an examination of how the agency chose to initiate
this particular search. The search will be reasonable if based either on (1)
specific evidence of an existing violation, (2) a showing that reasonable
legislative or administrative standards for conducting an . . . inspection are
satisfied with respect to a particular (establishment) . . . or (3) a showing
that the search is pursuant to an administrative plan containing specific
neutral criteria. It is important that the decision to enter and inspect . . . not
be the product of the unreviewed discretion of the enforcement officer in
the field.

Id. at 907-908 (quoting See v. Seattle, 387 U.S. 541, 545 (1967) (citations and internal
quotations omitted). 10

4. Consent Exception to the Fourth Amendment

Consent is an exception to the requirement that searches be conducted under the

authority of a warrant or its equivalent. The Supreme Court held in Schneckloth v.
Bustamonte, 412 U.S. 218, 219 (1973):

10
The court remanded the cases for determinations as to whether these constitutional
requirements were met. In a subsequent case, United States v. New Orleans Pub. Serv., Inc., 723
F.2d 422 (5th Cir. 1984) (NOPSI III), it held that NOPSI was not selected for review pursuant to
neutral criteria. The MP&L litigation concluded when the District Court, on remand, found that
OFCCP had developed an administrative plan with neutral criteria but it was not followed in
selecting MP&L for review. United States v. Mississippi Power and Light Company, 33 Fair Empl.
Prac. Co. (BNA) 1356, 1360 (S.D. Miss. 1984).

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 It is well settled under the Fourth and Fourteenth Amendments that a search
conducted without a warrant issued upon probable cause is “per se
unreasonable . . . subject only to a few specifically established exceptions.”
. . . It is equally well settled that one of the specifically established
exceptions to the requirements of both a warrant and probable cause is a
search that is conducted pursuant to consent.

(Citations omitted.) See also Freeman v. City of Dallas, 242 F.3d 642, 668 (5th Cir.
2001) (“in the absence of consent or exigent circumstances, administrative searches or
seizures of private houses or buildings without a judicial warrant violate the Fourth
Amendment. . . .”); United States v. Griffin, 555 F.2d 1323, 1324 (5th Cir. 1977)
(“Warrantless searches are per se unreasonable subject to a few narrowly drawn
exceptions. . . . One such exception is the knowing and voluntary consent of the person
subject to the search.”).

5. Requirements for proof of consent to search

Schneckloth is also the leading Supreme Court case on what constitutes consent to
a search. In that case the Court held:

[W]hen the . . . State attempts to justify a search on the basis of . . .consent,

the Fourth and Fourteenth Amendments require that it demonstrate that the
consent was in fact voluntarily given, and not the result of duress or
coercion, express or implied. Voluntariness is a question of fact to be
determined from all the circumstances, and while the subject’s knowledge
of a right to refuse is a factor to be taken into account, the prosecution is
not required to demonstrate such knowledge as a prerequisite to
establishing a voluntary consent.

412 U.S. at 248-49.

Consent can be established by proof of contemporaneous consent at the time of the

actual search. Evidence of a prior agreement to permit a search for specific documents
and of specific places in connection with obtaining a government benefit or contract may
also establish consent.

A. Contemporaneous consent

In cases involving challenges to administrative searches, courts have held that

when contemporaneous consent to the search was given, the search was lawful. In
Simplex Time Recorder Co. v. Sec’y of Labor, 766 F.2d 575 (1985), for example, the

USDOL/OALJ REPORTER PAGE 14

 D.C. Circuit held that the employer consented to a search broader than the parameters of
a complaint filed with OSHA. It found evidence of consent in the fact that Simplex’s
safety engineer consulted with counsel before permitting the search, indicating he knew
he could object at any time to the wider search, but remained silent as the inspection
proceeded. 766 F.2d at 581. See also cases cited in Simplex at 766 F.2d 581-82:
Stephenson Enterprises, Inc. v. Marshall, 578 F.2d 1021, 1023-24 (5th Cir. 1978)
(company consented to walk-through inspection when its representative accompanied
inspector and failed to raise any objections); Sec’y of Labor v. Concrete Constr. Co.,
1992 O.S.H.D. (CCH) P 29,681, 1992 WL 117120, at *3 (O.S.H.R.C.) (“there is no
indication that [the OSHA inspector coerced the foreman] or misled [him] in any way.
[The OSHA inspector] simply explained that he was on the worksite to conduct an
inspection, and [the foreman] made no further inquiry.”). See also Lake Butler Apparel
Co. v. Sec’y of Labor, 519 F.2d 84, 88 n.14 (5th Cir. 1975) (holding that a consensual
inspection exists “where the compliance officer presented himself at the plant in the same
manner as might any other government official and the [employer’s representative] had
the same right of refusal,” and distinguishing cases in which the search is not lawful
because consent was given only after law enforcement officials made misrepresentations
regarding their authority to conduct the search); Sec’y of Labor v. Sanders Lead Co.,
1993 O.S.H.D. (CCH) P 29,980, 1993 WL 840006 (O.S.H.R.C.) (consent to inspection
voluntarily given where employer had previous experience with OSHA inspections and
had benefit of professional consultant and legal counsel at all stages of inspection). Cf.
Cody-Zeigler, Inc. v. Sec’y of Labor, 2002 WL 595167, 19 O.S.H. Cas. (BNA) 1777,
2002 O.S.H.D. (CCH) P 32,559, (D.C. Cir. Mar. 15, 2002) (employer’s objection under
OSHA Section 8(a) and Fourth Amendment to manner in which it was selected for
inspection, after unsuccessful challenges to five citations, rejected because employer
consented to 12 inspections); Donovan v. Carolina Stalite Co., 734 F.2d 1547 (D.C. Cir.
1984) (company effectively consented to inspection under Mine Safety and Health Act
when upper-level managers, having heard inspector’s interpretation of statute, had ample
opportunity to familiarize themselves with its procedures); In the Matter of Trinity
Industries, Inc., 2002 WL 826938 (Environmental Protection Agency, Office of the
Administrator, April 24, 2002) (voluntary consent to inspection shown by receipt of prior
notice, presentation of credentials on day of inspection, explanation of purpose of
inspection, and signature by company of Notice of Inspection.).11

11
BOA has also cited to us Donovan v. A. A. Beiro Const. Co., 746 F.2d 894 (D.C. Cir.1984),
in which a construction company, after initially objecting to and preventing an OSHA inspection of
the portion of a construction site on which it was working, did not resist after OSHA inspectors
returned and claimed authority to inspect based on consent from the site’s owner. The D.C. Circuit’s
statements regarding Beiro’s consent to the inspection while interesting, are dicta. The court’s
holding was that Beiro had no expectation of privacy in the common and open areas of the site (and
therefore citations relating to those areas and to what could be seen in plain view were lawful), and
that the ALJ’s decision dismissing (based on language in the pertinent regulation) OSHA’s citations

USDOL/OALJ REPORTER PAGE 15

 B. Consent as condition of receiving government contracts or benefits

(1) Cases Holding Consent by Contract Renders Search Lawful

In cases arising under a variety of government programs, courts also have held that
consent given as a condition of receiving government contracts or benefits precludes an
objection to a search on Fourth Amendment grounds. See, e.g., United States v. Brown,
763 F.2d 984, 987-88 (8th Cir. 1985) (pharmacy “explicitly consented to reasonable
warrantless inspections” of its records by entering into contract; warrantless inspection
which occurred during business hours and in presence of defendant pharmacist did not
violate Fourth Amendment); Zap v. United States, 328 U.S. 624 (1946) (where
government contract required access to contractor’s records, Navy contractor had no
Fourth Amendment claim to privacy in these mandatory records).

(2) Cases Holding Consent by Contract Only Authorizes Reasonable Search

Several courts have held that the process for selecting the subject of the search
must be reasonable, even when the subject gave prior consent by contract to be searched.
Those courts have reasoned that the contractual consent constituted only consent to a
constitutionally reasonable search.

In First Alabama Bank of Montgomery v. Donovan, 692 F.2d 714 (1982), the
Eleventh Circuit considered the constitutionality of an OFCCP compliance review under
all three contract compliance laws. First Alabama Bank was covered under these laws by
virtue of its contracts as a depository of federal funds and an issuer and paying agent of
United States savings bonds.12 In those contracts, it agreed to be bound by the provisions
of Executive Order No. 11,246 and Department of Labor regulations, including the
requirements to furnish all information and reports required by the Order and regulations
and to permit access to its books, records and accounts for purposes of investigation of its
compliance. 692 F.2d at 716, 719; see Executive Order No. 11,246, Section 202(5) and
41 C.F.R. §§ 60-1.7 and 60-2 (1992).13

relating to flammable items stored in Beiro’s tool trailer, was supported by substantial evidence.
12
BOA admitted in its answers to OFCCP’s interrogatories that it was a depository of
government funds and an issuing and paying agent for United States savings bonds and that it was a
covered government contractor.
13
See also Beverly Enterprises, Inc. v. Herman, 130 F. Supp. 2d 1, 14 (D.D.C. 2000)
(“Executive Order 11,246, which requires companies that contract with the federal government to
maintain an affirmative action program, has been widely held to authorize administrative searches to
confirm compliance with its mandates.”).

USDOL/OALJ REPORTER PAGE 16

 The bank argued that its contractual agreement did not include consent to searches
that are unreasonable or otherwise unconstitutional.14 The court agreed and held that the
bank expressly consented only to reasonable searches, but that the proposed search was
reasonable. 692 F.2d at 720, 721.

The court first set forth “general considerations” relevant to the case. 692 F.2d at
720. It found “most significant . . . the finding of the district court that the search would
have imposed ‘no real burden’ on the bank [because] the records in question either
already had been prepared or would have been prepared in any event,” and that this was
relevant to the reasonableness of the search.

In addition, the Eleventh Circuit found that First Alabama Bank’s “express and
voluntary” agreement to the record keeping and access requirements of the Executive
Order, as well as the low burden on the bank in providing the information, decreased the
strength of the bank’s privacy interest. The court contrasted that low privacy interest
with the “relatively strong public interest in providing for full equal employment
opportunity.” Id. at 720-21.

The court then examined the particular compliance review more closely. The
court found it was clear that OFCCP met the first two of the three MP&L tests for
evaluating the reasonableness of an administrative search, since searches conducted
pursuant to Executive Order 11,246 are within proper statutory legal authority and are
properly limited in scope. Id. at 721. Turning to the third element (which in that case was
whether the search was pursuant to an administrative plan containing neutral criteria), the
court noted that OFCCP’s plan to focus compliance reviews on the banking industry and
on banks with more than 50 employees and over $50,000 in government contracts “seems
neutral on its face.” Id.15 It then rejected the bank’s attack on the plan’s reasonableness,
finding that DOL’s decision to pursue the investigation met Fourth Amendment
requirements, despite the fact that the bank had been reviewed previously. Id. at 721-
22.16

14
The government had argued that the bank waived any Fourth Amendment right to object to a
compliance review by signing contracts in which it agreed to accept the obligations of the Executive
Order. The court found, nonetheless, that the government did not controvert the bank’s assertion that
it had consented only to reviews which employ reasonable searches under the Fourth Amendment. It
stated that, in any event, it would not be inclined to read the contract otherwise. 692 F.2d at 719.
15
The bank did not dispute the government’s contention that DOL’s plan was neutral on its
face.
16
The bank contended that the plan was not neutral because the government had selected it

USDOL/OALJ REPORTER PAGE 17

 Similarly, in United States v. Harris Methodist Fort Worth, 970 F.2d 94 (1992),
the Fifth Circuit held that a hospital that had signed agreements to comply with Title VI
of the Civil Rights Act of 1964 consented to administrative searches “that comport with
constitutional standards of reasonableness.” 970 F.2d at 100. Relying primarily on the
so-called NOPSI (New Orleans Public Service, Inc.) trilogy,17 including MP&L, the court
held that the crucial question was how Harris Methodist was selected for the search. It
found that the selection was arbitrary because the regional HHS official who made the
selection admitted there was no written administrative plan establishing criteria for
selection, and he could not explain how the several unwritten criteria he claimed to have
in mind when making the selection “militated” in favor of selecting Harris Methodist. Id.
at 102. The court detailed how several of the criteria actually supported selection of
hospitals other than Harris Methodist and the regional official’s concessions that that was
the case “suggested that his decision was arbitrary [and] slipshod.” Id. at 102-103. The
court found that the regional official “acted arbitrarily and without an administrative plan
containing neutral criteria.” Id. at 103.

Beverly Enterprises, Inc. v. Herman, 130 F. Supp. 2d. 1 (D.D.C. 2000), raised
issues very similar to those before us. There, the United States District Court for the
District of Columbia rejected a government contractor’s argument that its selection for a
Corporate Management Review (CMR) by OFCCP under Executive Order No. 11,246
violated the Fourth Amendment. As here, an OFCCP District Office was instructed to
select one contractor in its geographical area for a CMR from a computer-generated list
of companies that had corporate headquarters in its district. Beverly claimed it had not
been selected according to a neutral administrative plan. Beverly made many of the same
arguments advanced by BOA here: that the local OFCCP official should have included
more than three companies on his “candidate list” for a CMR; that many other companies
in the area were qualified to be on the list; and that OFCCP had issued a memorandum
stating that it was using the EEDS computer selection system. 130 F. Supp. at 9-10.

Applying Barlow’s and MP&L, the District Court held that Beverly was properly
selected because OFCCP’s criteria for inclusion of companies on the computerized list

even though it had previously been reviewed. The court found that there were factors present which
made the decision to continue with the investigation sufficiently reasonable to meet constitutional
requirements. 692 F.2d at 722.
17
United States v. New Orleans Pub. Serv., Inc., 723 F.2d 422 (5th Cir. 1984) (NOPSI III);
United States v. Mississippi Power & Light., 638 F.2d 899 (5th Cir.) (NOPSI II); and United States v.
New Orleans Pub. Serv., Inc., 553 F.2d 459 (5th Cir.) (NOPSI I) rehearing denied, 559 F.2d 30
(1977), vacated, New Orleans Pub. Serv., Inc. v. United States, 436 U.S. 942 (1978).

USDOL/OALJ REPORTER PAGE 18

 and for striking companies from the list by the OFCCP local official were neutral.18 Id. at
15. The court also held that OFCCP actually applied neutral criteria in selecting Beverly.
Id. at 15-16. It implicitly rejected Beverly’s arguments that more companies should have
been on the CMR candidate list because many other companies in the area qualified to be
on the list, and that OFCCP had another selection procedure, the EEDS, that should have
been followed.

ANALYSIS

1. Existence of genuine issues of material fact

A. Voluntary contemporaneous consent

The case law clearly establishes that voluntary contemporaneous consent to search
constitutes an exception to Fourth Amendment requirements and allows a search to
proceed without a warrant or its equivalent (see discussion above at 13-14). If, as
OFCCP argues, BOA voluntarily consented to the compliance review, the requirements
of the Fourth Amendment would be satisfied, and further consideration of the existence
of a plan with neutral criteria would be unnecessary.19 Therefore, even if we were to
adopt the ALJ’s finding that the selection of the Bank’s Charlotte headquarters was not
made pursuant to a plan with neutral criteria, that alone would not entitle BOA to
dismissal of this case. The ALJ erred by not recognizing that contemporaneous consent
would remove the search from the requirements of the Fourth Amendment. He did not
examine the facts relevant to contemporaneous consent and apply the pertinent law. We
will now do so.

BOA urges us to find, based on the scheduling letter alone, that it could not have
given voluntary contemporaneous consent, and that OFCCP cannot succeed as a matter
of law. That would require us to determine, as BOA suggests, that the scheduling letter
can only be construed as coercive or as misrepresenting OFCCP’s authority. Moreover,
we would have to find that the language of the letter was so coercive or so misrepresented
OFCCP’s actual authority with respect to the instant review, that any subsequent consent
could not have been voluntary. The evidence submitted by BOA on this issue has not
indisputably established that that was the case.

18
The court in Beverly applied the requirement for a plan with neutral criteria to the Executive
Order compliance review without discussing the effect of prior contractual consent.
19
We consider only contemporaneous consent, since OFCCP has not raised BOA’s contractual
consent.

USDOL/OALJ REPORTER PAGE 19

 We note that the scheduling letter preceded the actual review by more than thirty
days, it is susceptible of interpretation both as to content and effect (see OFCCP’s
Exceptions to the Recommended Order at 17-21), and factors other than the letter could
have entered into whether voluntary contemporaneous consent was given.20 21 Also,
there is no evidence that the Bank could not have inquired as to its selection, leaving
aside the question of challenging it. Thus, we cannot find on this record that the
scheduling letter precluded the Bank from giving voluntary contemporaneous consent.
We therefore remand this case for hearing. The Board expects that the evidence
submitted on remand will fully establish the totality of the circumstances pertinent to
whether consent was voluntarily given to the compliance review. 22

As noted above, we would not dismiss this case even if we found the OFCCP
review was not conducted pursuant to a plan with neutral criteria. Whether there was
such a plan remains a relevant concern because, if OFCCP had such a plan and
implemented it, the motion for summary judgment should be denied on that ground alone
as well. We therefore next address that issue.

B. Search pursuant to an administrative plan containing neutral criteria

Genuine issues of material fact exist as to whether there was a plan with neutral
criteria and whether that plan was implemented. The ALJ therefore erred in granting
summary judgment to BOA.

BOA contended that the undisputed facts establish that the EEDS Manual was
OFCCP’s only administrative plan for selecting contractors for compliance reviews, that
it was not followed in selecting contractors for the corporate management review of the
Charlotte facility, and that therefore the search was not conducted pursuant to a plan with
neutral criteria. The ALJ accepted BOA’s contentions. For the following reasons, we

20
OFCCP asserts that bank officials cooperated fully in the conduct of the review.
21
Moreover, BOA’s argument that its consent was not voluntary rests on the assumption that
OFCCP did not proceed pursuant to a plan with neutral criteria. Our remand on the issue of whether
there was a plan with neutral criteria issue (see analysis below) removes the assumption and thereby
eliminates the basis for BOA’s argument at this time.
22
The actual behavior and communications between OFCCP’s and BOA’s employees would be
highly relevant. Evidence clarifying the nature and extent of contacts between the parties at each
step prior to, and at the time of, the compliance review, e.g., correspondence, and telephone and in-
person conversations between the Bank and OFCCP personnel related to the subject of compliance
reviews, as well as what actually happened when the on-site review was conducted at the Charlotte
facility, would be particularly germane.

USDOL/OALJ REPORTER PAGE 20

 reject the ALJ’s recommendations. 23

Before discussing the role of the EEDS in selection of contractors for review, we
think it is important to point out that the EEDS did not confer any rights on BOA.
Several courts have held that private parties may not challenge agency action on the
grounds that the agency failed to follow, or modified, an internal agency manual or
guidance on conducting its activities. For example, in Sunbeam Appliance Co. v. EEOC,
532 F. Supp. 96, 99 (N.D. Ill. 1982), the court refused to order EEOC to follow the
investigatory procedures in its Compliance Manual and enforced an EEOC investigatory
subpoena. It rejected the argument that EEOC had a duty to follow the procedures in its
Compliance Manual with respect to its investigation of Sunbeam because “procedures set
forth in the EEOC Compliance Manual are internal guidelines for the use of the agency.”
Quoting with approval the court’s decision in Hall v. EEOC, 456 F. Supp. 695, 702-03
(N.D. Cal. 1978), the court in Sunbeam said:

To reach the opposite conclusion would be to hamstring agencies in their

efforts to improve their internal procedures regarding the way they conduct
their business, and rob them of virtually all flexibility in dealing with
increasing workloads. Neither the APA nor notions of elementary fairness,
... require such a result.

The Compliance Manual, the court said, is in the nature of “interpretive rules, guidelines,
general policy statements, and instructions to staff” which are internal guidelines for
EEOC and confer no rights on private parties. Id. at 100. Even if the investigation was
of the type covered by a particular section of the Compliance Manual, the court held that
failure to follow that section did not “render the subpoena illegal and unenforceable.” Id.

Hall was a case involving differing internal agency guidance documents quite
similar to the facts here. After EEOC had issued its Compliance Manual, it also issued an
Accelerated Procedures Memorandum (APM) for use during the so-called Transitional
Quarter in 1976. Plaintiffs claimed that their charges were not adequately investigated

23
Although OFCCP has not specifically filed exceptions to this aspect of the ALJ’s
recommendations, the ARB has the power to review the record and reach its own conclusions.
Under the Administrative Procedure Act, “[o]n appeal from or review of the initial decision, the
agency has all the powers which it would have in making the initial decision except as it may limit
the issues on notice or by rule.” 5 U.S.C. § 557(b) (2000). On review of an initial decision an
agency has the authority to either adopt or reject an ALJ’s findings and conclusions and also may
reach its own conclusions from the record independent from those of the ALJ. See Starrett v. Special
Counsel, 792 F.2d 1246, 1252 (4th Cir. 1986); NLRB v. Stocker Mfg., 185 F.2d 451, 453-54 (3d Cir.
1950); Containerfreight Transp. Co. v. I. C. C., 651 F.2d 668, 670 (9th Cir. 1981); Union Mechling
Corp. v. United States, 390 F. Supp. 411, 419 (W.D. Pa.1974) (3-judge court).

USDOL/OALJ REPORTER PAGE 21

 and no bona fide attempt was made to conciliate the charges because of the use of
accelerated procedures. The court rejected that claim, holding, among other things, that
the APM “did not have a substantial impact on private rights” and was not subject to the
rulemaking requirements of the Administrative Procedure Act. 456 F. Supp. at 701-02.
The court held:

The Accelerated Procedures Memorandum modified temporarily the

procedures established by the EEOC Compliance Manual for processing
charges filed with the EEOC. . . . The purpose of manuals such as this one
is to instruct and provide guidance for the agency’s staff in administering
its responsibilities. The Compliance Manual fleshes out the bare bones of
the statute and regulations with explanations of the agency’s specific
policies and procedures; however, the Manual does not determine any
rights or obligations of parties before the EEOC. Thus, the changes in
EEOC procedures brought about by the Accelerated Procedures
Memorandum did not significantly affect any existing rights or obligations.

Id. at 702. See also United States v. Craveiro, 907 F.2d 260, 264 (1st Cir. 1990) (“the
internal guidelines of a federal agency, that are not mandated by statute or the
constitution, do not confer substantive rights on any party” (citations omitted))
(government’s alleged violation of its Handbook on the Comprehensive Crime Control
Act of 1984); United States v. Tipton, 11 F.3d 602, 612 (6th Cir. 1993) (government’s
alleged violation of Petite policy).

Sunbeam and Hall suggest that, like the EEOC Compliance Manual, the EEDS
Manual did not confer any rights on private parties. OFCCP, therefore, had no obligation
to BOA to utilize only the EEDS procedures for selecting contractors for compliance
reviews. Just as EEOC could implicitly modify its Compliance Manual (“the Accelerated
Procedures Memorandum . . . in effect modified the procedures of the EEOC’s
Compliance Manual”) with regard to the processing of certain charges, Hall, 456 F.
Supp. at 697 (emphasis added), OFCCP could modify the EEDS by means of another
selection plan for particular circumstances. OFCCP’s obligation, vis-à-vis BOA, only
was to utilize selection procedures that met Fourth Amendment requirements as
articulated in Barlow’s and NOPSI III. (The record contains no indication that the
OFCCP officials lacked authority to adopt alternative procedures.). We therefore reject
the premise of the ALJ’s decision that OFCCP acted arbitrarily simply by not following
the EEDS.

We next consider whether it was undisputed fact, as BOA contends, that OFCCP
had only one plan for selecting contractors for compliance reviews, and the EEDS was
that plan (BOA Fact #3). Careful reading of the record indicates that BOA’s assertion

USDOL/OALJ REPORTER PAGE 22

 cannot be accepted as an undisputed fact. See McKinney v. Dole, 765 F.2d 1129, 1135
(D.C. Cir. 1985) “‘the record must show the movant’s right to [summary judgment], with
such clarity as to leave no room for controversy,’” quoting National Association of
Government Employees v. Campbell, 593 F.2d 1023, 1027 (D.C. Cir. 1978). See also
Weiss v. Kay Jewelry Stores, Inc., 570 F.2d 1259, 1262 (D.C. Cir. 1972) (Summary
judgment “should be awarded only when the truth is quite clear.”).

The FY’94 Operational Plan, issued by the Acting Director of OFCCP in

September 1993, directed the Regional Offices to conduct corporate management
reviews. Attachment to BOA Exhibit I. It listed such reviews under the heading “special
initiatives” and specifically advised the Regional Offices that special initiatives were
compliance reviews. There is no evidence that the FY ’94 Operational Plan was not a
legitimate document or that its instructions were not based on a legitimate exercise of
authority. OFCCP listed the FY ’94 Operational Plan, but not the EEDS Manual, as a
document on which it relied in selecting the Charlotte facility. Id., OFCCP Response To
First Request for Production of Documents, Response to Request No. 11.

The EEDS Manual in the record (Exhibit D) contains no mention of corporate

management reviews. Geathers testified that to his knowledge the EEDS did not provide
for corporate management reviews, and that the review here was a discretionary review
that did not come under the EEDS. 24 Exhibit H at 117.

If corporate management reviews were compliance reviews (as the FY ’94 Plan
specified), but the EEDS did not apply to selecting contractors for them, then the EEDS
did not supply the criteria for selecting contractors for all compliance reviews. The
EEDS thus could not have been OFCCP’s exclusive basis for selecting contractors for
compliance reviews. As a consequence, BOA’s assertion of the manual’s exclusivity
cannot be adopted as an undisputed fact.25 26

24
The record does not establish that Geathers was specifically qualified to provide definitive
testimony on the relationship between the EEDS and corporate management reviews; however, his
testimony is sufficient to raise a question.
25
In determining that BOA’s assertion concerning the exclusive nature of the EEDS Manual
cannot be accepted as fact, we do not make an affirmative finding to the contrary.
26
We also note that the ALJ’s acceptance of the 1995 Policy Alert, issued in April 1995, as
establishing the exclusivity of EEDS procedures in November 1993, went beyond the evidence. The
existence of a 1995 memorandum which referenced the 1992 Manual was an insufficient basis from
which to infer that the 1992 Manual’s procedures were required in November 1993 and that they
were exclusive (particularly where the 1995 memorandum is a “reminder,” suggesting that the
continuous application of the EEDS Manual from 1992 through 1995 may not have been a given).

USDOL/OALJ REPORTER PAGE 23

 Before the ALJ, OFCCP contended that the Region and District followed a plan.
OFCCP further contended that that plan was implemented in the selection of the Bank’s
Charlotte office. More specifically, OFCCP submitted that the depositions of Geathers,
Deavers, and Gaudin, established that the Charlotte headquarters was chosen through use
of criteria in the following manner: the criteria were received by Geathers and passed on
to Deavers; the criteria were modified by Geathers for budget reasons to limit
consideration to contractors in the Charlotte/Mecklenberg area;27 Gaudin supplemented
the criteria to require that only one company per industry be selected in the Region and to
take into account that the company was in a growing industry with opportunities for
affirmative action. OFCCP submitted that those criteria were neutral. In contrast, BOA
asserted that the EEDS was the only plan OFCCP’s Regional and District Offices were
authorized to follow and they did not do so. Further, BOA argued that the criteria
employed by OFCCP were not neutral – in particular, it suggested that the bank was
selected because Gaudin was biased against banks.

Based on the record submitted, genuine issues of fact exist as to: what plan
pertained (the EEDS Manual; the FY ’94 Operational Plan; a plan devised by the Central,
Regional, and District Offices of OFCCP; or some combination); what criteria pertained
(the EEDS criteria or the criteria set forth in the depositions of the Central, Regional, and
District Office officials); whether the criteria for contractor selection were neutral; and
whether the review was actually conducted pursuant to a relevant plan and its neutral
criteria (including whether Gaudin’s views on banks entered into the selection process
and if so whether those views constituted a permissible non-neutral criterion). Those
matters therefore were not ripe for summary decision.

Since we have established that exclusive application of the EEDS cannot be

accepted as an undisputed fact, we need not consider the second component of BOA’s
assertion – that OFCCP ignored the EEDS Manual in selecting the Charlotte office for
review.28 However, we observe that the criteria for discretionary reviews in the EEDS,
unlike those for other types of EEDS reviews, are phrased as advice (“should”), rather
than as directives, leaving open the possibility that the EEDS could have been followed.
Cf. EEOC v. Univ. of Pittsburgh, 643 F.2d 983, 986 n.4 (3d Cir. 1981) (“the EEOC need
not follow the procedures outlined in its compliance manual in every case. The manual’s
provisions are discretionary in this respect. . . .”), and compare EEDS (“Fifteen
percent Discretionary Selections . . . When deciding [on selection of contractors for

27
It is unclear whether this modification occurred before or after the list and criteria were given
to Deavers.
28
But see discussion above of agency discretion in the adherence to internal guidelines.

USDOL/OALJ REPORTER PAGE 24

 discretionary reviews], the Director should consider . . . .” (emphasis added)).

BOA made an additional argument for its proposition that the uncontested facts
established that Charlotte was not selected based on a plan with neutral criteria, to wit
that OFCCP’s selection of the Charlotte headquarters was the product of the agency’s
unbridled discretion. The ALJ agreed and found that the selection process actually used
by OFCCP was “not neutral, but was arbitrary to the point of being unconstitutionally
unreasonable.” Recommended Order at 13.

The ALJ found that the selection of the Charlotte facility was arbitrary in part
because he accepted BOA’s assertion that at least 20 eligible contractors had
headquarters facilities in the Charlotte area and OFCCP did not explain how it selected
BOA from among those 20 facilities. BOA cites this ALJ finding in arguing before the
Board that the selection was arbitrary.

Geathers made location within the Charlotte-Mecklenburg area a criterion for

selection because of staffing and budgetary considerations and his desire personally to
oversee the corporate management review (the first his office had undertaken). Exhibit H
at 103-104. The record does not disclose that Geathers was not authorized to impose a
geographic limitation because of staffing and budgetary concerns, and we are not
prepared to find that such a limitation was arbitrary and capricious on its face.29 We note
that the document relied on by BOA to establish the number of facilities eligible for
review, Exhibit L, was dated November 29, 1993, after the Charlotte facility was selected
for review, although the computer printout attached to the transmittal memorandum was
dated 1992. Assuming the same list of headquarters facilities was available before the
Charlotte facility was selected, there were only seven facilities in Charlotte itself, making
only those seven eligible for consideration (not 20 as suggested by BOA). Exhibit L at
24.30

29
Such a challenge to this additional criterion sounds more appropriately under the APA than
under the Fourth Amendment, and in any event, is questionable for the reasons discussed above.
30
It appears that none of the other companies on the Charlotte list were located in Mecklenberg
County, the only other area referenced by Geathers. In any event, the inclusion of even all of the
other cities on the Charlotte list would have brought the number of companies up to a maximum of
13. There was no evidence in the record that Geathers included cities on the Raleigh or Columbia,
lists locations which BOA included in arriving at its assertion (adopted by the ALJ) that at least 20
companies would have qualified for review. The ALJ thus substituted BOA’s suggested criteria for
the criteria OFCCP said it used. We find no basis for doing so. We take notice that companies on the
lists included by BOA were located a significant distance from Charlotte, for example, Greenville,
South Carolina is over 100 Miles from Charlotte, and Raleigh is 170 miles.

USDOL/OALJ REPORTER PAGE 25

 The record also does not disclose whether all seven of the companies met the other
criteria the Assistant District Director was given. Exhibit F at 30-32. OFCCP did state
the criteria it used to narrow down the list of Charlotte headquarters facilities – that the
facility must be the headquarters of a corporation on the Fortune 500 or 1,000 list; that
the corporation have at least 4,000 or 5,000 employees; that the corporation must be a
multi-establishment company; that the facility must not have been previously reviewed.31
Exhibits F, H at 102-105, K at 49 and 53. In addition, the company must have been one
of the top five in the region, and there must have been significant opportunities for
affirmative action at the facility. Exhibit M at 7. These criteria are not arbitrary on their
face. See discussion above of Beverly Enterprises, Inc. v. Herman and United States v.
Harris Methodist Fort Worth. Application of these criteria could eliminate companies
from the list, consistent with OFCCP’s contentions. See Deavers’ deposition discussed
above. Thus it is not apparent that OFCCP acted arbitrarily.

Furthermore, as the court in First Alabama Bank noted, the fact that First Alabama
Bank was one of twelve banks in the region that met OFCCP’s criteria for selection, did
not render the choice of that bank arbitrary. 692 F.2d at 717. It is well accepted that a
prosecutor’s choice of one out of a number of subjects for investigation or prosecution is
well within her discretion and cannot be considered arbitrary for that reason alone. Cf.
Esmail v. Macrane, 53 F.3d 176, 178-79 (7th Cir. 1995) (“simply failing to prosecute all
known lawbreakers, whether because of ineptitude or (more commonly) because of lack
of adequate resources [is not actionable]. The resulting pattern of nonenforcement may be
random, or an effort may be made to get the most bang for the prosecutorial buck by
concentrating on the most newsworthy lawbreakers, but in either case the result is that
people who are equally guilty of crimes or other violations receive unequal treatment,
with some being punished and others getting off scot-free. That form of selective
prosecution, although it involves dramatically unequal legal treatment, has no standing in
equal protection law.”). See Beverly Enterprises, 130 F. Supp. 2d at 15 (consideration of
only three companies for selection from computerized list of numerous contractors in
area not arbitrary).32

Therefore, genuine issues of material fact exist as to what plan with criteria (plan)

31
Although there are some variations in OFCCP officials’ descriptions of the criteria, it is not
apparent from the face of the record that the differences are significant.
32
We also cannot agree with the ALJ that Gaudin’s comment about the affirmative action
record of banks is proof of bias or arbitrary selection. The record does not demonstrate that Gaudin’s
views, expressed in a conversation more than a year after the selection of the Charlotte office,
entered into the process used for that selection. Being a bank was not a selection factor listed by
OFCCP. Moreover, as the court noted in Beverly Enterprises, “targeting an industry is not a non-
neutral factor.” 130 F. Supp. 2d at 16 n.9.

USDOL/OALJ REPORTER PAGE 26

 actually applied to selecting the Charlotte facility and whether that plan actually was
implemented in Charlotte’s selection. Whether the plan and its application met Fourth
Amendment requirements is also at issue.

Accordingly, this matter is REMANDED to the ALJ for further proceedings

consistent with this order.

SO ORDERED.

JUDITH S. BOGGS
Administrative Appeals Judge

M. CYNTHIA DOUGLASS
Chief Administrative Appeals Judge

OLIVER M. TRANSUE
Administrative Appeals Judge

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